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Spain Clocks Up Vigorous Growth

Spain notched up vigorous growth in the third quarter, prior to the current Catalan crisis, official data showed on Monday.

Spain’s gross domestic product expanded by 0.8% in the period from July to September, the national statistics institute INE calculated in a preliminary estimate, AFP reported.

That carries on from strong growth of 0.9% in the second quarter and 0.8% in the first quarter, as the Spanish economy enjoys robust consumer demand, a tourism boom and buoyant export demand.

The data do not, however, take into account any economic fallout from the crisis in Spain that has ensued since the Catalan government held an illegal independence referendum on October 1.

The quarterly growth data are in line with the government’s forecasts, and both the government and the central bank are penciling in full-year economic growth of 3.1% for this year. Madrid is confident of meeting that goal in 2017, despite the Catalan crisis. But it has revised down its forecast for 2018 to 2.3% from 2.6% previously.

The government is predicting “a slight slowdown in domestic demand, as a result of the negative impact of the uncertainty related to the current political situation in Catalonia,” it said in mid-October.

A number of institutions, including the International Monetary Fund, have recently cautioned that the Catalan crisis, Spain’s worst in decades, will have a negative impact as the semi-autonomous region accounts for 19% of the country’s total GDP.

The credit rating agency S&P Global has even suggested Catalonia could fall into recession. Nearly 1,700 companies have relocated out of Catalonia in the wake of the referendum, including banks CaixaBank and Banco Sabadell, and other companies such as Gas Natural or Abertis.

Separately, the statistics agency INE said that Spanish inflation slowed fractionally to 1.7% in October from 1.8% in September, as a result of a dip in fuel prices.

Meanwhile, Spanish tourism seems to be taking a big hit from the political crisis in Catalonia.

Experts say spending in the tourism sector in Catalonia in the first two weeks of October—that is, following the independence referendum—was down 15% from a year earlier.

Travel data analytics company ForwardKeys says international air reservations for Catalonia have fallen 22% since the beginning of October.